partnering my SMSF in buying a motel

Viewing 8 posts - 1 through 8 (of 8 total)

littlelot
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@littlelot
Join Date: 2003
Post Count: 9
May 10, 2013 - 8:55 pm
I am seeking someone with knowledge of the ins and outs of buying a motel and using my SMSF funds as part of the proceeds. Am happy to pay for a consultation but other than cold calling a large accounting firm I don't know who to ask. Any suggestions?
crj
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@crj
Join Date: 2004
Post Count: 618
May 10, 2013 - 9:10 pm
Are you buying a motel to operate yourself or the freehold of a motel that is leased out and will continue to be leased out? Will either you or the SMSF need to borrow? does this fit within the investment strategy of the SMSF?
littlelot
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@littlelot
Join Date: 2003
Post Count: 9
May 11, 2013 - 4:44 am
sorry I was a bit slack on the information provided. I am buying a leasehold motel and i am 52 years old and my SMSF strategy allows it. I will need to borrow further funds as well. Sole purpose test is to provide for my retirement in a few years. was hoping to do a unit trust of some type and use the SMSF as a part owner. Thanks Tony
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
May 11, 2013 - 11:39 am
It can be done but the hotel cannot he used a security.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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littlelot
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@littlelot
Join Date: 2003
Post Count: 9
May 11, 2013 - 11:49 am
All I need to do is join my funds with the SMSF funds and then obtain a bank loan for the balance and then structure it to appease the ATO. sounds complicated
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
May 11, 2013 - 11:59 am
littlelot wrote:
All I need to do is join my funds with the SMSF funds and then obtain a bank loan for the balance and then structure it to appease the ATO. sounds complicated
Not that simple. You shouldn’t mix trust funds with non trust funds – a SMSF is a trust. You could be breaching your trustee duties.
You would have to borrow using other security. SMSF could not borrow.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Richard Taylor
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@qlds007
Join Date: 2003
Post Count: 12,024
May 12, 2013 - 5:55 am
Terry is bang on and hate to say whoever has told you to the contrary is totally incorrect.
You cannot use the property as security but certainly borrow against another property and look to purchase the property a Tenants in Common.
Definitely seek expert advice on this one.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Mick
Participant
@motelmingle
Join Date: 2010
Post Count: 7
July 24, 2013 - 10:27 am
Yes totally agree with Qlds007 and Terryw.
The problem I see here is that motel leaseholds are a business and not bricks and mortar therefore can not be borrowed against with a SMSF. However if you decided to go the other way and purchase a motel freehold, the rules change as you actually have bricks and mortar to borrow against.
Check with the ATO and i am sure they will point you in the right direction.
Cheers
Mick | Motel Mingle
http://motelmingle.com.au/
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